According to sources that have been briefed on Apple’s plans, the company wants to create what is described as an online DVR of sorts. The device would seemingly blur the lines between on-demand content and live television as it would store entire episodes of shows in iCloud. Furthermore, viewers would be able to start watching a live broadcast from the beginning long after it had started, somewhat similar to what Time Warner offers with their Start Over feature. All of this would be available "on demand" without the user having to schedule any recordings.

The device would further differentiate itself from traditional set-top box on-demand services by offering all episodes of current seasons of television shows as well as making previous seasons available for viewing.

The WSJ also noted that the user interface would resemble the one found on the iPad, making it easier for people to navigate than existing cable set-top box menus. Apple also wants users to be able to access content from the box using other iOS devices.

If you recall, this all sounds a lot like what Steve Jobs described to Walter Isaacson in his self-titled biography shortly before he died.

"I’d like to create an integrated television set that is completely easy to use," he told me. "It would be seamlessly synced with all of your devices and with iCloud. No longer would users have to fiddle with complex remotes for DVD players and cable channels. It will have the simplest user interface you could imagine. I finally cracked it."

Such a device would require participation from a number of big players in the television industry, a challenge that may be insurmountable even for Apple.